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We need to think about creating a strong community development system as well as strong CDCs.

In creating sustainable change over time, a community development system, like natural ecosystems and economies, is a network that requires diversity, redundancy, competition, and a healthy environment. We need a wide variety of CDCs—urban, suburban, and rural; small, medium and large; neighborhood based and regional; those that provide housing and those that are multi-actors. Different roles and approaches—including some level of overlap, duplication and competition will ensure long-term sustainability and maximize impact. In such a system, the demise of a single entity is unlikely to disrupt the entire system and new organizations can bring innovation and change. By contrast, as the current banking crisis demonstrates, a system that depends on a small number of very large institutions can be brittle and subject to rapid and dramatic breakdown.

Of course, healthy, natural economic systems require a regular cycle of birth, growth, and death. Some existing organizations have outlived their usefulness and others have struggled for years to achieve meaningful impact. They need to be willing to recognize when it is time to close, or merge, or move their programs to another agency. At the same time, healthy systems also welcome new life on a regular basis. The notion that we have “too many CDCs” creates a danger that will stifle new leadership and creative organizations that have yet to be born or even conceived. A recent study by the Aspen Institute found that nearly one half of the young leaders who aspire to lead nonprofit organizations hope to start their own organization. Our movement needs these young leaders and we must create space for them in our field. Funders and policy makers must adopt policies that allow new organizations to start, and they must also impose the discipline necessary to let others close.

Think long term

Our desire for measurable results each quarter cannot create such short sightedness that we fail to invest in long-term efforts that can create transformative change. The most successful CDCs in Massachusetts and around the country are the ones that have been able to sustain their efforts over one or more generations.

Make the business of community development financially viable.

A well-managed, disciplined CDC can execute its programs and projects effectively. At the same time, the “profitability” of most CDC activities is determined not by pure market forces or even their own actions, but by the policies adopted by government agencies and to some degree private funders. CDCs that undertake affordable housing development or operate community programs should be able to earn enough money to both cover their costs and build their financial capacity over time. One key recommendation emerging from the Innovation Forum is that affordable housing policies need to be adjusted to better ensure that nonprofit developers can earn ongoing revenue from their existing portfolio of properties. Such revenue not only rewards sound management practices, but it strengthens organizational capacity over time and reduces reliance on developer fees that, at best, are an uneven source of revenue. Too often, funders seek to squeeze their CDC partners in the name of fiscal responsibility in ways that undermine our long-term efficacy. Policy makers should reexamine allowable developer fees, cash flow distribution, overhead rates, and other policies that impact CDC fiscal viability. Funders should see such payments as investments in future capacity and long-term sustainable community change.

Create a consistent source of working capital to support effective CDCs.

There is clear evidence that access to stable and flexible funding helps to increase long-term CDC impact. This has been demonstrated in Massachusetts where for over 20 years the state provided funding to CDCs, helping to create one of the strongest CDC networks in the country. LISC, Enterprise, and NeighborWorks have all repeatedly demonstrated the power and impact that such funding can have. As part of our nation’s long-term economic recovery strategy, Congress should establish such a program. Congressman John Lewis is expected to file such legislation later this year to do just that. In the short term, public and private funders should provide an immediate infusion of capital to sustain the field during this crisis as Congress has done for other nonprofit sectors such as Community Action Agencies, Community Health Centers and Community Development Financial Institutions.

Update and modernize our Community Development Infrastructure

Effectively designed support systems can enable CDCs to remain relatively small, efficient, and locally accountable while gaining the efficiencies and quality control that we need to compete in the current environment. There is a real gap in our infrastructure on the operations and educational side; as such, we need to create systems that can support CDCs with property management, asset management, loan fund administration, financial management, human resources, information technology, communications and other operational areas. We also need to make training and technical assistance more universally available throughout the field. Existing, effective programming, like that offered by NeighborWorks and LISC, needs to be expanded, making them more accessible at the local level, providing more support for both practitioners and volunteer leaders so they can access these opportunities. In Massachusetts, we recently launched the Mel King Institute for Community Building for precisely this purpose.

Make room for new leadership

The future of the community development movement will lie in the hands of a new generation of leaders who are coming of age today. These leaders are less beholden to the models and practices of the past and more willing to embrace new strategies, technologies and approaches. We need to support these new leaders, welcome their creativity, and empower them to reshape the field in ways that we cannot yet envision. We also need to welcome leaders entering community development as a second career; mid-career people coming in from other sectors.

Create stronger linkages to other sectors

The future of community development is intertwined with other sectors and social movements. We all know that CDCs can foster some of the things that healthy neighborhoods need, but not everything. That is why we are seeing so many more collaborations between CDCs and other types of organizations—youth groups, health centers, schools, and business associations. Indeed, we see the lines between the community development field and these other sectors starting to blur. We need to build a business model that enables CDCs to focus on creating and sustaining these connections in the context of comprehensive community development strategies.

Build our power to organize and advocate for new public policies

The single biggest limitation on CDC scale and impact is not their organizational structure or competence, but inadequate public funding and failed public policies. Our movement must build the organizing and advocacy capacity we need in order to generate the power to change these policies (for example, the Low-Income Housing Tax Credit, and land use and zoning laws). A broad network of CDCs, each with a base of membership and local leaders who can be mobilized, is essential to building this power. We need to fund this organizing capacity and view it as central to the role of CDCs. We also must have strong city and state level advocacy coalitions and a more unified national voice.

Not every CDC is able to achieve the same level of results. But with America facing the worst economic crisis since the Great Depression, with neighborhoods facing abandonment and blight, and with families losing wealth, security, and their sense of community, now is not the time to talk about scaling back, shrinking the field or replacing it with a homogenous set of large-scale, bureaucratic organizations simply because that might make life easier or simpler for funders and investors. Community developers and all of our supporters should be thinking boldly about how we grow the movement to tackle the big challenges of today in a way that is consistent with our values and that moves us closer to an America where every neighborhood and community is a great place to live, where everyone has a fair opportunity to achieve economic security, where people of all colors, backgrounds and incomes can have a voice in the future of their community. To achieve such an America, CDCs must play a prominent role.